Independent bankers preview Senate race at convention

Northwestern Financial Review, Aug 15, 2001 by Bengtson, Tom

Thirty years after a group of men formed the Iowa Independent Bankers association to combat the onset of branch banking, Iowa Gov. Tom Vilsack has signed a law opening up the industry to statewide branching. At a time when some might suggest IIB should fade away with its once defining issue, the association is enjoying a rebirth. Its annual convention July 18-21 at Okoboji, Iowa was brimming with enthusiastic bankers who are rebuilding the foundation of the organization for a future that appears to be bright.

"We chose to take the organization back," said 2000-2001 IIB President Marti Rodamaker, First Citizens National Bank, Mason City. "There-is a lot of enthusiasm among our membership. Four years ago, we couldn't get our board members to come to the meetings. Now when we have meetings, all of our directors show up and we are running out of seating."

It was the fourth convention for Don Hole, the association's executive director since March 1998. Hole has brought a level of professionalism and enthusiasm to the association previously unknown to the group. During his first three years on the job, Hole has moved the association office to new quarters, expanded the staff to five from three, added volunteer committees, and broadened the scope of the annual convention, which has been conducted in Okoboji every year since the group's founding in 1971.

The 30th annual convention featured an interesting glimpse of the senate race that is likely to emerge for the fall of 2002 between Sen. Tom Harkin (D-Iowa) and Rep. Greg Ganske (R-Iowa). In addition, there were presentations from motivational speaker Ed Foreman, consultant Mark Stenson, economist Paul Nadler, and Robert Gulledge, the president of the Independent Community Bankers of America. In addition, Holmes Foster, the long-time chairman of the Banks of Iowa, made his first appearance ever at an IIB convention. He is Iowa's Superintendent of Banking and offered the group an update on state banking issues.

Election Preview

Breakfast speeches by Harkin and Ganske demonstrated the breadth of the political spectrum. Harkin, who is chairman of the Senate Agricultural Committee, said FDIC insurance coverage should be increased to $200,000 per account. Municipal deposits, he said, should be fully covered. In addition, he said the law should be changed to make it easier for banks to convert to subchapter S status. The new farm bill, he said, should focus on the development of rural America. He supports an approach that encourages the production of farm-related alternative fuels such as ethanol. In addition, he said he supports the establishment of an international school lunch program.

Ganske focused on the effects of the tax cut. Rebates, he noted, will reach American citizens at a time when the economy needs a stimulus. Ganske also said the country needs to develop more fuel alternatives, but said we need to support nuclear power, which currently supplies about a quarter of the nation's energy. Ganske, who was a physician before he was elected to Congress seven years ago, also described a plethora of health care issues, including challenges faced by rural hospitals.

Harkin clearly took his opportunity to speak before this predominantly Republican group seriously. His speech touched on several of the independent banking industry hot buttons.

"I commend you for your strong stand against ATM fees," Harkin told the bankers. "Me Iowa system is an overwhelming success. Clearly our no-fee rule has not led to difficulty in finding an ATM in Iowa."

Perhaps the biggest distinction between Harkin and Ganske was their view of the tax cut. Harkin said the tax cut will make it difficult to fund other priorities, such as education.

Rep. Tom Latham (R-Iowa), a convention regular, addressed the bankers between the Harkin and Gaske presentations. Latham, like Ganske, talked about the importance of the tax cut. "People can spend the money themselves better than some bureaucrat in Washington,"he said.

"It is morally wrong," Latham continued, as he moved to discuss the estate tax. "How can you justify punishing people when they die?"

Latham said most people support the concept of an international lunch program but they fear entrusting funds to dictators of poor countries without assurances the money will go to feed children.

While Harkin said the Senate will consider legislation this fall to increase the level of deposit insurance coverage, Latham said that in the House "there will be a real push to raise the deposit insurance coverage level."

Nadler, the Rutgers University professor who writes a widely-read industry column, asked Latham about the privatization of Social Security. Latham explained Republicans favor an approach that would give citizens an opportunity to invest a small portion of their Social Security account in a variety of managed, diversified funds. During his presentation later, Nadler said the government treats Social Security payments the same way it treats income from tax collection. If money is diverted away from that system into private investment fiends, the government will have to come up with other sources of funding or cut spending. Nadler called the current Social Security system a regressive tax, noting that 90 percent of Americans pay more in Social Security than they do in income tax.